Is light appearing at the end of the tunnel for cryptocurrencies, including the asset class’ largest, Bitcoin?
After Bitcoin and others tumbled earlier in 2022, Bloomberg reports that Bitcoin may have reached its floor. “Bitcoin may be finding some support at the 2017 peak of $19,511 that, at the time, was a record high for the largest cryptocurrency. The token has wavered since mid-August, dropping below the closely watched $20,000 level, but has averted a drop below the 2017 high over the period. Traders are watching technical levels to see if Bitcoin has found a floor after a 57% plunge in 2022,” writes Joanna Ossinger.
Maybe yes, maybe no.
In spite of, or maybe because of the recent high volatility of this asset class, cryptocurrencies are even more part of the mainstream discourse in finance, in which “buy low, sell high” is the cardinal rule. As a result, the prices and valuations of cryptocurrencies have exploded in the last decade as investors, searching for growth in a zero-interest-rate environment, have poured money into the asset class, and in 2022 were stung by the serious dips.
Overall, though, the inflow of money has broadened the boundaries of crypto’s investing landscape and made it more complex. Currently, more than 20,000 cryptocurrencies are available for trading. Each cryptocurrency boasts an array of technical terms, many of them difficult to explain, to sell its value proposition.
So, how do you find cryptocurrencies to invest in? Knowing where to look and how to evaluate them will help you determine whether or not investing in them is worth it.
- Using several sources to vet a cryptocurrency is the best way to find a new one to invest in.
- Exchanges, data aggregators, and social media are some of the quickest methods for finding a new cryptocurrency.
- Cryptocurrency tools, like PooCoin Charts and Token Sniffer, provide in-depth looks at cryptocurrencies that can help you decide which ones are better than others.
- Non-fungible tokens (NFTs), crypto-linked exchange-traded funds (ETFs), and initial coin offerings (ICOs) are also ways to gain exposure to this market.
Where to Find New Cryptocurrencies
Should you invest in an initial coin offering (ICO)? Are non-fungible tokens (NFTs) a good idea? What is decentralized finance (DeFi)? Navigating the cryptocurrency landscape can be confusing. The absence of quantifiable and trustworthy criteria for evaluation and a plethora of scams have further perplexed potential investors and made them wary.
Despite the problems, however, cryptocurrencies may be an asset class worth investigating. They can add diversity to your portfolio, and their price volatility can offer good returns. There are several places you can monitor to see what new cryptocurrencies are emerging:
- Cryptocurrency exchanges: Binance, Coinbase, Crypto.com, Gemini, Kraken
- Data aggregator: CoinGecko, CoinMarketCap
- Social media: Discord, Telegram, Twitter
- Websites: Smith & Crown, Top ICO List
- Tools: PooCoin Charts, Token Sniffer
- DeFi platforms: These applications supplant traditional financial services. Some might have tokens or coins with prospects.
- NFT marketplaces: OpenSea, Rarible, and SuperRare are popular marketplaces to look for new NFTs that show promise.
- ICOs: Initial coin offerings are fundraising events for possible coin releases.
- Exchange-traded funds (ETFs): You can invest indirectly in crypto through derivatives that trade on mainstream exchanges.
Cryptocurrency exchanges are one of the most reliable sources for finding new investments. For example, Coinbase generally lists new cryptocurrencies on its website, but you must set up an account for better access. Binance has a list of new crypto that you can look over and investigate further.
A data aggregator gathers information on specific topics. Cryptocurrency data aggregators help you find new crypto. For instance, CoinMarketCap collects and displays a list of new cryptocurrencies, their prices, market capacity, and trading volume. This type of service helps you get some information to determine what other investors think about the cryptocurrency and whether it has potential.
Market capacity is the total fiat value that a specific cryptocurrency has on the market.
CoinGecko is another data aggregator that lists new coins with much of the same information that CoinMarketCap offers.
Social media is known for its ability to transmit information fast. Twitter, for example, is one of the quickest-moving and -responding platforms in the United States. Cryptocurrency developers and founders can be found on Twitter, tweeting about their cryptocurrency whenever there are changes or new coins. Notifications for specific keywords on Twitter are especially helpful. If you set up alerts for “new crypto,” “crypto release,” or simply “crypto,” you will receive notifications about any cryptocurrency-related tweet.
Telegram is another instant messaging platform that can deliver timely new crypto developments.
There are many websites that you can look over to find new cryptocurrencies. Some of the more reputable ones are Top ICO List and Smith & Crown.
You can use several tools to help you verify the validity of a cryptocurrency. PooCoin Charts lets you enter the token name or its address and displays information about transactions, contracts, holders, price, and more, enabling you to see whether anyone else is active.
Token Sniffer lets you enter the cryptocurrency’s name or address and displays an audit of it. For instance, a scan of Ax-1 Orbit (address 0x0c...b805) displayed the following information on Aug. 13, 2022:
- Warning: The coin was flagged for being part of a scam, bug, or hack.
- Swap analysis: Token is sellable, has a buy-and-sell fee of less than 10%
- Contract analysis: Verified contract, no prior similar contracts, the source is not an owner, no special creator permissions
- Holder analysis: Creator holds less than 5% of the supply, other holders have less than 5% of the supply
- Liquidity analysis: Not enough liquidity, 95% of liquidity is burned/locked, creator holds less than 5% of liquidity
- Token similarities: None
Token Sniffer lets you view the contract code and generate a bubble map that shows you the creator’s address, the addresses of the top 100 holders, and the percentage that they hold. You’ll also see any burn addresses, which is where developers send coins to take them permanently out of circulation.
Decentralized finance (DeFi) platforms are a relatively new venue for crypto investments. They function like traditional finance marketplaces, except that they use smart contracts to execute transactions. Many DeFi platforms have native tokens used within their networks to facilitate transactions. Examples of DeFi platforms are Kraken, Binance, and Bitstamp.
Non-Fungible Token (NFT) Marketplaces
NFTs are one-of-a-kind digital assets that have been tokenized—which is the process of linking an encoded alphanumeric sequence to the asset and storing that information on a blockchain. This establishes ownership without question because the token’s network validators must verify ownership through a consensus.
Luxury retailers, such as Tiffany and Gucci, are using NFTs, which are popular with some customers.
NFTs are also critical components of the metaverse, an emerging tech trend championed by enterprises that operate in the digital landscape.
Examples of popular NFT marketplaces are OpenSea and Rarible, where you can find them ranging in price from hundreds to tens of thousands of dollars. There are also specialized marketplaces that focus on a particular industry or sport. For example, the National Basketball Association (NBA) has an NFT marketplace called TopShot, while the National Football League (NFL) has partnered with Dapper Labs to produce exclusive digital video highlights of iconic moments in its history.
Initial Coin Offerings (ICOs)
Initial coin offerings (ICOs) eclipsed venture capital as the primary fundraising method for entrepreneurs in 2018. Startups and prominent companies alike jumped onto the ICO bandwagon. Then the ICO bubble burst, as scams proliferated on their ecosystem and the U.S. Securities and Exchange Commission (SEC) began investigating and cracking down on them.
Exchange-Traded Funds (ETFs)
You can also invest indirectly in cryptocurrencies through derivatives that trade on mainstream exchanges. The Chicago Mercantile Exchange (CME) crypto futures, including Bitcoin and ether futures, are a popular option with investors looking for indirect exposure to crypto. Bitcoin-linked exchange-traded funds (ETFs), based on CME’s bitcoin futures, debuted in crypto markets in 2021, and more continue to emerge as brokerages work to persuade the SEC to approve crypto-linked ETFs.
Researching New Crypto Coins
Beneath their technical jargon, cryptocurrencies are products that serve a purpose, whether it be only a method of payment (Bitcoin) or as a utility token used to perform actions on a blockchain (ether). Here are some factors to look into and tools you can use to help identify a coin that is not a so-called “rug pull,” which is a coin whose developers will accept payments for it and then pull it off whatever platform you purchased it from, while also keeping the funds you paid.
Many crypto data aggregators may report inaccurate information from exchanges. CoinMarketCap, one of the leading crypto price trackers, has struggled with data inaccuracies.
Ethereum’s ether (ETH) token is used as gas on its blockchain. “Gas” is the term that Ethereum uses to reference paying for someone’s energy use to verify your transaction. This makes ETH a perfect example of a use case that might incentivize someone to buy ETH. Ethereum is designed for scalability and future development. Many DeFi applications are built on its blockchain, and many more are being developed.
The uses for Ethereum, the global virtual machine that powers DeFi and is rumored to be powering Web 3, continue to grow. New utility tokens designed to work on the Ethereum Virtual Machine (EVM) emerge daily.
Bitcoin, on the other hand, was designed purely as a payment method. It became more valuable to investors, before 2022, when they noticed price increases on cryptocurrency exchanges. Shortly before the price increases, it developed a new use case as a store of value and an asset for investors who enjoy speculating.
The more use cases that a new coin and the blockchain that it supports have, the more likely it is that the cryptocurrency will last long enough to experience growth. However, this won’t always be the case.
A cryptocurrency needs to have liquidity—meaning that it should have enough trading volume that you can sell yours quickly if you need to. If you find a cryptocurrency with no volume, you should consider waiting to see whether it will develop any. If other investors aren’t trading a new crypto coin in large amounts, it might indicate that it isn’t yet worth buying or is a scam.
You should identify the value a coin has or might have. It’s likely that if it has value to you, others will value it. This type of value isn’t monetary; it is more intangible, such as an NFT that you identify with on a personal level. For example, this could be a graphic that triggers a happy memory, and you want the NFT so that you can be reminded of it—and hope for growth at the same time.
Some songwriters and musicians are creating NFTs from their music. Purchasing a song NFT directly supports the artists and gives you ownership of the token (and whatever rights the artist granted when the token was minted). The sports tokens mentioned previously may be the equivalent of trading cards or videos of the future.
Here’s what to know as well:
- Price is crucial—one element to keep in mind when scanning for the next superstar is the price of the token. For the average investors who don’t have a great deal of money to put into the cryptocurrency space, low-priced currencies may offer the best bang for their buck.
- Prospects for adoption—if you’re able to identify a cryptocurrency, which has an edge over others (and which therefore may be more likely to be widely adopted), this may be a good investment.
- Supply is a factor—most cryptocurrencies have a predetermined maximum supply. When that maximum is reached, typically through mining efforts, no new tokens will be produced.
- Price and volume—up-to-date information about cryptocurrency trading is easily available online. Those digital currencies with increasing price and volume of trades are likely to be those that have momentum. Of course, there is no guarantee that this momentum will be maintained, but it is nonetheless a useful way of seeing which digital currencies have the most investor interest for the time being.
Approach New Cryptocurrency Projects with Caution
Cryptocurrencies have emerged from the backwaters of mainstream finance as an asset for investment. However, the universe of investable cryptocurrencies and crypto-related products and services is still small and requires careful evaluation.
If you’re interested in investing in digital assets and new crypto, you should first talk with a finance professional to help you figure out if the investments make sense for your goals and financial circumstances.
How do I get new cryptocurrencies?
You can buy them and other digital assets at cryptocurrency exchanges, decentralized finance (DeFi) platforms, non-fungible token (NFT) marketplaces, and initial coin offerings (ICOs).
How do I acquire a new cryptorrency before listing?
New cryptocurrencies may be available in a presale before they are listed on an exchange. These sales may be announced on social media, news sites, or crypto-focused tracking sites like CoinMarketCap. As with every crypto asset, it is important to thoroughly research a project and team before making an investment.
How often are new cryptocurrencies launched?
New cryptocurrencies emerge regularly. The data aggregator CoinMarketCap lists new coins and tokens daily, and Top ICO List details new ICOs. Twitter and Telegram are also popular social media platforms for new coin announcements.
Investing in cryptocurrencies and other initial coin offerings (ICOs) is highly risky and speculative. This article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.